NewsWire: 12/11/2020
- According to a new report, most Millennials are saving for retirement (73%) and building emergency funds (51%). In general, young people’s financial preferences show that they’re more focused on saving for tomorrow than living for today. (Bank of America)
- NH: When it comes to money, most Millennials are playing it safe. According to this BoA report, nearly three-quarters (73%) of 24- to 41-year-olds are saving, up from 63% two years ago. More than half (51%) have more than $15k in savings, and 24% have more than $100k. The savers outnumber those who have no savings at all (27%) by a three-to-one ratio.
- When asked to choose between two options, 82% of Millennials said they’d rather buy a smaller, more affordable home than a larger home at the top of their budget. 73% would rather live a minimalist, frugal lifestyle than a maximalist one. 68% would prefer to “pay off debt quickly and make sacrifices along the way,” compared to 26% who would rather “pay [it] off slowly but live the life I want.” 57% would rather stay in a less desirable job with a higher salary than one they like more but pays less.
- The report also offers some comparisons showing that Millennials are more frugal than older generations were at the same age. On average, Millennials began saving for retirement at age 24, Gen Xers at 30, and Boomers at 33. In addition, fully 58% of Millennials said that finances were an “important consideration” when they started a family, compared to 49% of Xers and 46% of Boomers.
- We’ve often written about the Millennials' singular fixation on long time horizons and the need to save. (See "Millennials Embrace the Thrift Ethic" and "Once Again, a Nation of Savers.")
- Yet despite all their attention to scrimping and saving, most Millennials (75%) aren’t confident about their financial situation. Of those who say they have discretionary income each month, 47% feel guilty about spending it. The majority (51%) say their financial situation is behind where they think it should be--including 39% of those with six-figure household incomes.
- Significant shares of young people also believe their peers are making more money (43%) and are further ahead in their careers (43%) than they are. This makes them pretty realistic about how they're doing--only a bit more than half think doing they're about the same or better than others. However, they’re less likely to worry that they’re behind their peers in saving money (35%), which suggests that Millennials feel more confident about their behavior (something they can control) than about the outcome (something they can't).
- Bottomline: Millennials obsess a lot on the need to save. Yet they’re still struggling with a mismatch between social expectations and their own personal reality (see “Millennials’ Mental Health Struggles Go Beyond Finances”). Far more than older generations, Millennials feel ashamed to talk to anybody about how their doing economically (see "Don't Bring Up Personal Finances with Millennials"). Most of all, they sense that no matter how much they stash away, financial security still eludes them.
